You’ve sent invoices. You’ve made phone calls. But the
job you are working on or have completed still has gone unpaid. To protect your
business – and pay your own bills – you need to collect what is owed to you.
One of the ways the law allows you to collect on an
unpaid job is through a lien. Liens are a legal way to ask for the money owed
to you and your business. The Michigan Construction Lien Act is an excellent
tool for collecting on outstanding bills.
A lien shows your interest in a job or project; think of
it like your marker of sorts on a property. Liens are effective because they
prevent the property owner from receiving a mortgage or selling it until the
liens are satisfied. That is why it is an important way for you to receive the
payments owed to your construction business.
Under Michigan law, you can file a construction lien on a
property if you have provided materials to the job site or provided labor to
that property. You can file a lien if you are the contractor, subcontractor or
materials supplier.
In other words, anyone who provides an improvement to the
real estate as described in your contract with that property owner may file a
lien.
Here’s where the law comes in. What is an improvement? One
of the first things the Act describes is what it means to make an “actual
physical improvement” to the property. This is important because you cannot
file a lien unless you can show there have been visible changes on the project.
You must be able to say without a doubt that you made
physical improvements to a job site or project.
For the law to kick in, it says that a reasonable person
– meaning the average Jo or Joe on the street – could see that an improvement
was made to the project. This change would come about because of the work or labor
provided by a contractor, subcontractor or worker on the project as part of
your contract.
A potential lender and owner also must be able to see
that a physical improvement has happened. This helps to protect your interests
as a construction company if the property’s mortgage was still in process when
your work began.
However, some labor is not included in this description.
For example, “actual physical improvement” does not include your work in terms
of prepping the project – this means surveying, soil boring and testing. It
also includes the creation of architectural or engineering plans. The Act goes
so far as to say it does not include the prep of any plans or drawings of any
kind.
There is a risk in taking on any job, and that risk
includes not getting paid. But liens allow you to reduce that risk and ensure
that your work is valued and receives the payment it deserves.
If you want to make use of the Michigan Construction Lien
Act, contact the experienced attorneys at The Lien Company. We will prepare,
file, and serve your lien to make sure your rights are protected. You are
entitled to be paid for the work you’ve done and we can help.
www.LienCompany.com
www.LienCompany.com
